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NCUA on Monday sent a report on its recently adopted risk-based capital rule to the House Financial Services Committee, which voted overwhelmingly in September to support H.R. 2769, a NAFCU-sought bill that would have required NCUA to "stop and study" the rule before voting to implement it.

In the 228-page report, NCUA defends the agency's legal authority to create a two-tier risk-based capital system, also questioned in H.R. 2769. In addition, the report recommends that Congress allow well-managed credit unions to count supplemental capital as net worth and suggests other technical legislative changes affecting credit union capital requirements.

Committee Chairman Jeb Hensarling, R-Texas, wrote NCUA Chairman Matz before the Oct. 15 board vote to urge her to not proceed with the vote until the issue had been studied further and the agency had reported back to Congress.

During the board meeting, Matz had Hensarling's letter read into the record, as requested by him, and said NCUA would provide the committee with a report on the rule's impact within a few weeks.

The NCUA Board voted 2-1 to approve the rule, with Board Member Mark McWatters giving the dissenting vote. The rule is set to go into effect Jan. 1, 2019.

NAFCU continues to push Congress to create a legislative solution for capital reform. "NAFCU and our members fundamentally maintain that NCUA's risk-based capital rule fails to create a true and fair risk-based capital regime for credit unions," said Brad Thaler, NAFCU's vice president of legislative affairs. "We continue to believe it is an unnecessary regulatory burden that will be costly to the industry."

The association is reviewing the report and its legislative recommendations against the concerns outlined in H.R. 2769 and for their potential effects on credit unions.